Meet the Tariff-Resistant Dow Jones Dividend King Stock That Continues to Crush the S&P 500 in 2025

It's been a wild few weeks in the stock market, as tariff tensions seem to escalate and cool off at a moment's notice. But through it all, Dow Jones Industrial Average component Procter & Gamble (NYSE: PG) has been a steady stalwart. The maker of Tide detergent and Dawn dish soap, among other products, has increased its dividend for over 50 years -- earning P&G a coveted spot on the list of Dividend Kings.

Here's why P&G could be a rock-solid stock to buy now, especially for investors worried about an escalating trade war.

Image source: Getty Images.

P&G has considerable international exposure

At first glance, P&G seems like a high-risk company for trade tensions and currency volatility. The company operates in about 70 countries, sells products in about 180 countries and territories, and has higher international sales than domestic sales. P&G has a complex supply chain -- featuring 24 U.S. manufacturing sites, 78 international manufacturing sites, and a network of materials suppliers and various sales funnels.

However, P&G's two greatest advantages -- its size and its leadership across multiple product categories and brands -- make up for these risks. P&G is one of the largest global players in personal and household everyday-use products. Its lineup includes leading brands across beauty, grooming, healthcare, home care, fabric, baby, feminine, family care, and more.

P&G doesn't rely on a single brand, category, or geography. Its diversification is an advantage. And P&G has a track record of managing costs and, when necessary, passing along higher costs to consumers.

It's important to remember that tariffs and currency fluctuations impact P&G and its competitors. These aren't issues P&G is dealing with in a vacuum. Because of its size and product mix, the company is generally better positioned to handle industrywide problems than its competitors.

PG data by YCharts

The epitome of pricing power

Over the last few years, P&G has dealt with inflationary pressures and negative impacts on foreign exchange. Inflation has weighed on sales volumes. A strong U.S. dollar relative to other currencies hurts P&G's results because it converts earnings made overseas into dollars. If those currencies are getting relatively weaker compared to the dollar, it means less dollar-denominated income for P&G.

Yet despite these pressures, P&G has still achieved net sales growth thanks to price increases. Here's a look at year-over-year changes in factors that impact net sales growth for P&G's last three fiscal years. Note that P&G's fiscal year ends on June 30, so fiscal 2025 will end in a few months.

Data source: Procter & Gamble.

P&G's pricing power results from its competitive advantages in size and product variety. Because P&G produces so much product, its scale could help with negotiations with its suppliers and manufacturing partners, whereas a smaller company simply doesn't have as much negotiating leverage.

In sum, P&G is impacted by tariffs, but it has the qualities necessary to reduce the impact of those tariffs on its earnings growth.

P&G is far from cheap

P&G is a very well-run company that can do well in a recession because it sells consumer staples, which customers are less likely to pull back on than discretionary products and services. The company's consistency supports a sizable capital return program that includes buybacks and dividends. P&G has raised its dividend for 68 consecutive years and regularly repurchases stock, which allows earnings per share to grow faster than net income.

The only concern with buying P&G now is its valuation. It sports a 26.6 price-to-earnings (P/E) ratio, which is above its 10-year median P/E of 25.7. This valuation is especially high considering that P&G could post negative earnings growth in the coming fiscal year if tariffs stick around. So investors are paying a premium price for P&G relative to its historical average, even though P&G's growth has slowed in recent years, and it is heading into perhaps the most challenging period since the pandemic.

A foundational dividend stock you can buy and hold forever

Despite its expensive valuation, P&G could still be a good buy for risk-averse investors looking for a company they can count on regardless of trade tensions or economic cycles. Given its international exposure, the company looks vulnerable to tariffs. But because of its competitive advantages, P&G should be able to pass along (rather than absorb) tariff-related costs.

Due to its track record, business model, and dividend affordability relative to earnings, P&G arguably has the most reliable dividend among any U.S. publicly traded company. Its 2.5% yield is much higher than the S&P 500 ) average of 1.4% -- but not necessarily in high-yield territory.

There are far better bargains and higher-yielding stocks than P&G, but few companies come close to its quality -- making it a good buy for investors looking to keep their portfolio safe during tariff volatility.

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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.